Tax Extenders Legislation Signed into Law

Congress has passed and the president, on Dec. 18, signed the Protecting Americans from Tax Hikes (PATH) Act of 2016. The legislation makes permanent the minimum 9 percent low-income housing tax credit (LIHTC) applicable percentage or rate for federally unsubsidized developments. This doesn’t apply to the acquisition cost of existing projects or projects that use tax-exempt bond financing. These projects must still use the floating 4 percent tax credit percentage. This amendment is retroactively effective as of Jan. 1, 2015.

In addition, the legislation makes permanent the military housing allowance exclusion for LIHTC income qualification for personnel stationed at or near certain military bases for determinations made before Jan. 1, 2017. Excluded areas include any county that contains a qualified military installation to which the number of members of the Armed Forces assigned to the units based out of such qualified military installation increased by 20 percent or more as of June 1, 2008, over the personnel level of Dec. 31, 2005, and includes any adjacent counties. The affected military installation must have at least 1,000 members of the Armed Forces assigned to it.

The president also signed the FY 2016 Omnibus spending bill, which increases federal investments in many affordable housing and community development programs. It provides nearly $1.6 billion in additional spending for HUD programs compared to FY 2015. As a result, the bill restores funding to critical programs such as the HOME Investment Partnership program and Housing Choice Vouchers and Project-Based Rental Assistance Program, which have seen significant cuts in recent years.